Cellphone banking matures

By Warwick Ashford, ITWeb London correspondent

Johannesburg, 24 Feb 2006

Cellphone banking is maturing rapidly, with 180 000 registrations and 1.8 million transactions valued at R200 million since March last year, says First National Bank (FNB).

"Adoption of cellphone banking has exceeded our expectations, reaching our 18-month target of 100 000 subscribers within only nine months of the launch of our SMS-based service," Len Pienaar, CEO of FNB mobile and transact solutions, told a media briefing in Rivonia yesterday.

Boosted by this success, FNB is targeting half a million cellphone banking transactions a month, which Pienaar says he hopes to achieve by the end of this year.

According to Pienaar, cellphone banking has rapidly overcome the barrier of negative perception to become part of daily life for the thousands of subscribers to the service, who are drawn from the top and bottom ends of the market. "Cellphone banking is the only channel that works across the spectrum."

Pienaar says FNB`s cellphone banking service has been profitable since November and ascribes this to innovative use of open source technology, and a fast and simple registration process that does not require users to download anything or make changes to their phones.

"Purchasing prepaid airtime is also a major driver, accounting for 65% of transaction volumes."

FNB has also seen increases in registrations with the introduction of competing services. "Ever since MobileMoney from Standard Bank and MTN was introduced in August last year, we see the benefit in terms of increased registrations every time they promote the concept of mobile banking," says Pienaar.

Despite this success, FNB is aiming to drive the economies of scale by offering free cellphone banking for the next three months. It will waive all cellphone banking transaction charges and get the three cellular networks to zero-rate cellphone banking traffic.

In October last year, Absa made a similar move to promote its cellphone banking by waiving related charges for six months until 31 March, but succeeded in persuading only Vodacom to drop SMS fees for three months.

"FNB is confident that once customers realise how easy and convenient it is to use the cellphone banking channel, they will continue to use it," says Pienaar. "It also forms an important part of the bank`s strategy to provide banking services to previously unbanked South Africans."